Government Settlement Transparency and Reform Act

It's important to note the actions of elected officials during their tenure, not simply their campaign rhetoric.

Elizabeth Warren promised to fight for Americans and is following through on her campaign promise!

Massachusetts should be proud we elected Senator Warren!

 

Thank you for contacting me about the tax treatment of corporate settlement payments to the federal government.

As you may know, JPMorgan and the U.S. Department of Justice agreed to a settlement in November 2013 over the sale of troubled mortgages. DOJ announced that the total value of the settlement was approximately $13 billion. It turns out, however, that as much as $11 billion of the settlement amount is tax deductible - potentially reducing what JPMorgan might actually pay by more than $4 billion.

The JPMorgan example is not unique. Federal enforcement agencies routinely tout large dollar figures in settlement agreements - figures that may be significantly reduced by tax deductibility, credits for routine activity, and other fine print.

These federal enforcement agencies are supposed to work for the public - not for the companies they regulate. Settlement agreements with corporate wrongdoers should be tough, fair, and free of these sorts of loopholes. That is why I have co-sponsored S.1654, the Government Settlement Transparency and Reform Act, which would limit the circumstances in which settling companies can claim tax deductions for government settlements.

At a minimum, if the agencies are confident that these settlements are a good deal for the American people, they should be willing to publicly disclose key terms and conditions. That is why I recently introduced the bipartisan Truth in Settlements Act with my colleague, Sen. Tom Coburn (R-OK). Our legislation would require regulatory agencies to clearly disclose the key terms and conditions of settlement agreements to the public -- including the potential tax treatment of any settlement payments -- instead of hiding unflattering details in the fine print. Such increased transparency can help shut down backroom deal-making and ensure that settlements truly benefit the public interest.

I appreciate your reaching out to my office, and I will be sure to keep your comments in mind as I continue to work with my colleagues on this issue.

Sincerely,

Elizabeth Warren
United States Senator

Washington, DC 317 Hart Senate Office Building Washington, DC 20510 Phone: 202-224-4543

Boston, MA 2400 JFK Federal Building 15 New Sudbury Street Boston, MA 02203 Phone: 617-565-3170

Springfield, MA 1550 Main Street Suite 406 Springfield, MA 01103 Phone: 413-788-2690